Cross-border shopping: Commission decides to
close the case against the UK over seizures of tobacco and
cars

The European Commission has decided to close the case against the
United Kingdom over its application of EU law relating to excise duties on
tobacco and alcohol. The Commission considers that the changes made by the UK
authorities in its policies and practices in relation to the importation of
excise goods from other Member States are in line with the changes requested in
the Commission's reasoned opinion. This latest Commission action follows on
earlier letters, a formal request to the UK to change its law and a referral to
the Court of Justice (see IP/01/1482,
IP/02/1320,
IP/03/1539,
IP/04/867
and IP/04/1255
).

"The Commission has been examining the United Kingdom's policy concerning
cross border shopping for tobacco and alcohol very carefully over a long period
of time" said László Kovács, the European Commissioner for
Taxation and Customs Union. "Member States have a right and duty to combat fraud
and fight tax evasion. I am pleased that we were able to agree to ensure that
the balance is maintained between this legitimate aim and the principles of the
Internal Market. Of course, I am also pleased that we have been able to find a
pragmatic outcome in this case, in order to avoid lengthy proceedings before the
European Court of Justice.”

Background information

Under EU legislation, individuals are entitled to bring back excise goods
(tobacco and alcoholic beverages) which have been bought tax paid in a Member
State without incurring further charges, provided the goods are transported by
the individuals themselves and are for their own use. This does not apply if the
goods are bought on behalf of a third party.

Where Member States suspect such goods are not for own use, they are required
to give consideration to specified criteria before coming to a conclusion on
whether or not these goods are for a commercial purpose. One such criterion is
the quantity of goods. However quantity is but one criterion amongst others and
the Member States may not apply any quantitative limits (except in respect of
certain new Member States whose duty rates do not meet EU minimum levels).

Where a person brings back goods for a commercial purpose, i.e. a purpose
other than his own use, and fails to comply with the formalities that apply to
such situations under EC rules, the Member States are entitled to apply
sanctions, provided these are reasonable and proportionate in accordance with
general principles of EU law.

Infringement proceedings

Following a number of complaints, the Commission opened in October 2001
proceedings against the United Kingdom, asking the UK for observations on its
policies and practices in applying EU law on the importation of excise goods
from other Member States.

Since then, the UK and the Commission has been engaged in an exchange of
views on this issue.

In the time passed since the beginning of the proceedings, the Commission
understood that the UK had gradually modified its policies in relation to the
forfeiture of vehicles in cases involving purchases of excise goods on behalf of
a third party and for small-scale offences. The Commission further understood
that the UK had amended its legislation to make clear that the burden of proving
that goods are held for a commercial purpose rested with the authorities.

Nevertheless, the Commission considered that two aspects of the UK's
sanctions policies – those relating to the purchase of excise goods on
behalf of a third party, and the importation of excise goods by post (referred
to below as "irregular movement") - remained disproportionate where there were
no aggravating circumstances.

The Commission therefore issued a reasoned opinion (see IP/04/867)
requesting the United Kingdom to modify its policies. As the United Kingdom
failed to comply, the Commission decided (see IP/04/1255)
to refer the matter to the European Court of Justice (ECJ) for a ruling.

Following further discussions, the United Kingdom has amended its policies
relating to such irregular movements, as laid out in the Commission's reasoned
opinion.

Under the new policies, in such irregular movement cases, the UK will no
longer systematically seize as liable to forfeiture the goods and cars of
persons holding excise goods for purposes other than their own use.

Instead, in first-time irregular movements without aggravating
circumstances, the holder will be offered the option of holding on to his goods
against payment of the duty plus a penalty. Where a car is used to carry the
goods in such cases it will not be seized but the owner will normally be warned
that it could be seized in any further cases.

The Commission considers that there is no further need to refer the case to
the ECJ as the Commission believes that this new policy corresponds to the
practical policy changes set out in the Commission's reasoned opinion.

Commission case's reference number is: 2001/4138For the latest general
information on infringement measures against Member States see: